Forget SCHD: 3 Overlooked Dividend ETFs Yielding Over 5% That Deserve Your Attention

The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) is performing well again, but the rationale for not holding all your eggs in one basket still rings true. Thus, looking into alternative dividend ETFs like the Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY), Harbor Commodity All-Weather Strategy ETF (NYSE:HGER), and Pacer Metaurus US Large Cap Div Multiplier 400 ETF (NYSEARCA:QDPL) is a good idea.

These stocks are genuine dividend stocks paying higher yields, and they do so without gimmicks like call options with tech exposure. Alternatives are worth paying serious attention to as SCHD is already up big and may not have much more room to maneuver. I don’t think SCHD can end the year up by more than 20%, as that would be extraordinary for any dividend ETF.

Hence, it makes sense to look into dividend ETFs that are more under-the-radar.

Invesco KBW Premium Yield Equity REIT ETF (KBWY)

KBWY invests in real estate investment trusts (REITs), and these REITs are some of the most under-estimated investment vehicles in the current environment. We are no longer in the year 2008, and the industry has learned a lot. It is provably more resilient, as REITs kept on paying higher dividends through record interest hikes in 2022 and 2023 and are set to keep increasing their dividends.

Investors panicking prematurely and Treasuries giving investors a competitive yield caused KBWY to fall in the past few years. This is reversing as interest rates are coming down again and real estate prices are climbing. For dividend investors, this spells opportunity because REITs are mandated to return at least 90% of their earnings to shareholders as dividends to maintain their tax-free status.

I see double-digit gains in the coming quarters as rising real estate prices, declining interest rates, and treasury yields, plus more attractive dividend yields from REITs, all coalesce into a boon for KBWY.

KBWY already gets you a 9.49% dividend yield. The expense ratio is just 0.35%. It is up nearly 4.5% year-to-date.

Harbor Commodity All-Weather Strategy ETF (HGER)

Commodity prices are rising. Opportunistic investors are turning that into cash by investing in ETFs like HGER. This ETF was launched in 2022 by Harbor Capital Advisors and tracks the Quantix Commodity Index (QCI), designed by Quantix Commodities LP under the leadership of Don Casturo, a former Goldman Sachs partner with over 25 years in commodity markets.

The eligible universe includes futures on WTI crude oil, Brent crude, heating oil, gasoil, RBOB gasoline, natural gas, corn, wheat, KC wheat, soybeans, soymeal, soybean oil, cocoa, cotton, coffee, sugar, live cattle, lean hogs, copper, aluminum, nickel, zinc, gold, and silver. So the raw material is broad, spanning energy, agriculture, metals, and livestock.

HGER has matched the S&P 500’s performance since its February 2022 launch, and this is quite remarkable for a commodity ETF.

I expect the upward momentum to continue. Remember, this is an inflation hedge ETF, and the current geopolitical environment is primed to cause more inflation and volatility across commodity markets.

HGER has a 5.74% dividend yield with an expense ratio of 0.68%.

Pacer Metaurus US Large Cap Div Multiplier 400 ETF (QDPL)

This ETF gets you an exceptionally strong dividend yield and upside participation. It quadruples the dividend yield of the S&P 500 by using financial derivatives. QDPL does not use futures or covered calls.

Unlike covered call ETFs, you are not selling away future upside by writing call options on the stocks owned by the fund. QDPL’s model does not sell away upside that aggressively and still manages to get you a high dividend yield.

Here’s QDPL against the most popular covered call ETF.

It’s also tax-efficient, and I would argue a safer alternative to covered call ETFs that aggressively cap upside. The more capped upside is, the harder it is for an ETF to recover from losses, and this builds up over time. The only way to r this drag is by reinvesting the dividends, which defeats the purpose of holding covered call ETFs in the first place.

QDPL does cap upside, but less aggressively. The catch is that the dividends are a bit lower, though still high.

QDPL comes with a 5.79% dividend yield. It has a monthly dividend distribution frequency and an expense ratio at 0.60%.